18 April 2011

One of the most difficult challenges companies face today is how to be more flexible and adaptive in a dynamic, volatile business environment. How do you build a company that can identify and capitalize on opportunities, navigate around risks and other challenges, and respond quickly to changes in the environment? How do you embed that kind of agility into the DNA of your company?

The answer is to distribute control in such a way that decisions can be made as quickly and as close to customers as possible. There is no way for people to respond and adapt quickly if they have to get permission before they can do anything.

If you want an adaptive company, you will need to unleash the creative forces in your organization, so people have the freedom to deliver value to customers and respond to their needs more dynamically. One way to do this is by enabling small, autonomous units that can act and react quickly and easily, without fear of disrupting other business activities – pods.

A pod is a small, autonomous unit that is enabled and empowered to deliver the things that customers value.

08 February 2011

The average life expectancy of a human being in the 21st century is about 67 years. Do you know what the average life expectancy for a company is?

Surprisingly short, it turns out. In a recent talk, John Hagel pointed out that the average life expectancy of a company in the S&P 500 has dropped precipitously, from 75 years (in 1937) to 15 years in a more recent study. Why is the life expectancy of a company so low? And why is it dropping?

I believe that many of these companies are collapsing under their own weight. As companies grow they invariably increase in complexity, and as things get more complex they become more difficult to control.

The statistics back up this assumption. A recent analysis in the CYBAEA Journal looked at profit-per-employee at 475 of the S&P 500, and the results were astounding: As you triple the number of employees, their productivity drops by half (Chart here).

This “3/2 law” of employee productivity, along with the death rate for large companies, is pretty scary stuff. Surely we can do better?

I believe we can. The secret, I think, lies in understanding the nature of large, complex systems, and letting go of some of our traditional notions of how companies function.

THE COMPANY AS A MACHINE

Historically, we have thought of companies as machines, and we have designed them like we design machines. A machine typically has the following characteristics:

1. It’s designed to be controlled by a driver or operator.
2. It needs to be maintained, and when it breaks down, you fix it.
3. A machine pretty much works in the same way for the life of the machine. Eventually, things change, or the machine wears out, and you need to build or buy a new machine.

A car is a perfect example of machine design. It’s controlled by a driver. Mechanics perform routine maintenance and fix it when it breaks down. Eventually the car wears out, or your needs change, so you sell the car and buy a new one.

And we tend to design companies the way we design machines: We need the company to perform a certain function, so we design and build it to perform that function. Over time, things change. The company grows beyond a certain point. New systems are needed. Customers want different products and services, so we need to redesign and rebuild the machine, or buy a new one, to serve the new functions.

This kind of rebuilding goes by many names, including re-organization, reengineering, right-sizing, flattening and so on. The problem with this kind of thinking is that the nature of a machine is to remain static, while the nature of a company is to grow. This conflict causes all kinds of problems because you have to redesign and rebuild the company while you also need to operate it – an idea dramatized in an EDS commercial from a few years ago: Building an airplane in flight.

THE COMPANY AS AN ORGANISM

It’s time to think about what companies really are, and to design with that in mind. Companies are not so much machines as complex, dynamic, growing systems. As they get larger, acquiring smaller companies, entering into joint ventures and partnerships, and expanding overseas, they become “systems of systems” that rival nation-states in scale and reach.

So what happens if we rethink the modern company, if we stop thinking of it as a machine and start thinking of it as a complex, growing system? What happens if we think of it less like a machine and more like an organism? Or even better, what if we compared the company with other large, complex human systems, like, for example, the city?

Cities have no central planning commissions that solve the problem of purchasing and distributing supplies… How do these cities avoid devastating swings between shortage and glut, year after year, decade after decade?

No, we don’t try to control cities, but we can manage them well. And if we start to look at companies as complex systems instead of machines, we can start to design and manage them for productivity instead of continuously hovering on the edge of collapse.

Cities aren't just complex and difficult to control. They are also more productive than their corporate counterparts. In fact, the rules governing city productivity stand in stark contrast to the ominous “3/2 rule” that applies to companies. As companies add people, productivity shrinks. But as cities add people, productivity actually grows.

Okay, you say, but cities are fundamentally different than companies. Just because this works for cities doesn’t mean that it will work for companies. Right?

THE LONG-LIVED COMPANY

Actually there’s some interesting data there too. Back in the early 1980’s, right after the revolution in Iran, Shell Oil was concerned about the future of the oil industry. What might Shell look like after oil, they wondered? So they commissioned a study with some very interesting parameters:

1. First, they looked only at large companies with relative dominance in their industries, companies similar to Shell in that regard.
2. Second, they looked only at companies with very long lifespans – 100 years or more.
3. Third, they looked at companies who had made a major shift from one industry or product category to another.

In other words, they looked at the immortals: the companies that didn't die.

The study was never published, but the findings were detailed in a book: The Living Company by Shell executive Arie de Geus. Shell studied 40 large, long-lived companies, some of which were still surviving after 400+ years.

Interestingly, these companies had a lot in common with large cities:

Ecosystems: Long-lived companies were decentralized. They tolerated “eccentric activities at the margins.” They were very active in partnerships and joint ventures. The boundaries of the company were less clearly delineated, and local groups had more autonomy over their decisions, than you would expect in the typical global corporation.

Strong identity: Although the organization was loosely controlled, long-lived companies were connected by a strong, shared culture. Everyone in the company understood the company’s values. These companies tended to promote from within in order to keep that culture strong. Cities also share this common identity: think of the difference between a New Yorker and a Los Angelino, or a Parisian, for example. At the Dachis Group we like to call this common culture hivemind.

Active listening: Long-lived companies had their eyes and ears focused on the world around them and were constantly seeking opportunities. Because of their decentralized nature and strong shared culture, it was easier for them to spot opportunities in the changing world and act, proactively and decisively, to capitalize on them. At Dachis we sometimes call this dynamic signal (watching and listening) and metafilter (information leading to decisive action).

DESIGN BY DIVISION

Historically we have designed companies like machines – by division. We construct the org chart to divide the big chunks of work and separate them from each other: Finance, Sales, Operations. We design the work flows that process inputs into outputs: raw materials into products, prospects into customers, complaints into resolutions.

As we design this kind of company – the divided company – we need to separate functions, which means people may not always have a sense of the larger thing they are working on. They get very good at one of the tasks, but lose touch with the larger picture. So we have to design rigid policies and procedures so people will function efficiently and so they won’t interfere with each others’ work.

The problem comes with scale. As the number of employees grows, the profit per employee shrinks. It’s a game of diminishing returns. Efficiencies of scale are balanced out by the burdens of bureaucracy. Divisions become silos, disconnected from each other. Overhead costs increase with size. The resulting need for control, and the inability to achieve it at a reasonable cost, is what eventually kills a business.

DESIGN BY CONNECTION

Although we tend to design companies like machines, we instinctively and intuitively understand that companies are not made of cogs, levers and gears. In the end, they are made out of people. For top management, it would be wonderful if we could put our business strategy into the machine, push a button and wait for the results. But it doesn’t work that way. You have to put your strategy into people if you want to get results.

And today, thanks to social technologies, we finally have the tools to manage companies like the complex organisms they are. Social Business Design is design for companies that are made out of people. It’s design for complexity, for productivity, and for longevity. It’s not design by division but design by connection.

To design the connected company we must focus on the company as a complex ecosystem, a set of connections and potential connections, a decentralized organism that has eyes and ears everywhere that people touch the company, whether they are employees, partners, customers or suppliers.

Social Business Design is a new discipline, but some basic rules are already emerging. These emerging rules have less in common with traditional business design, and more in common with urban design and city planning. It’s not about design for control so much as design for emergence. You can’t control a complex system, but you can manage its growth, and there are a lot of things you can do that will position it for success. Here are a few of those emerging practices that signal excellence in design by connection:

Understand the culture: A company is like a city in many ways. First and foremost, a city is about the people who live and work there; it’s an expression of their collective culture. Before you can start your path to the connected company, you need to understand the culture (or cultures) that are already there, so you can look for ways to enhance and strengthen that shared identity.

Start small. Urban designers might look at maps or aerial views as they make their plans, but the life of a city happens at street level. As you initiate social programs, think of them as if you are designing a city street. A successful street is filled with people. The last thing you want is a whole bunch of large, urban areas with no people in them. In a city, big, open, empty spaces feel unsafe and unloved. So start small. The smaller the space is initially, the faster it will fill up with people. A good way to start is with an organization-wide project or initiative that requires participation from a number of people across the company. This gives you a cross-section of ideas and perspectives to look at as you plan the next stage.

Spaces need owners. Again, think of the city street: every business or building has an owner. The sidewalks have owners – typically every business at street level “polices” their stretch of sidewalk. And even the street has owners – the street sweeper, the cop on the beat. In the same way, make sure that every online space you create has someone positioned to take care of it, to keep it safe and clean.

Every person needs a place. In the same way that public spaces need caretakers, every person needs a place to live; somewhere they can put their stuff. As you build your social business, make sure that every single person has a place where they can put, and see, their stuff: their projects, the links they want to get back to, the documents they have created, their role, qualifications, expertise and so on.

Jumping-off points. A good city street offers opportunities that are unanticipated but serendipitous. The promising side-street. The sound of music coming through an open door. As you design for connection, think about how you might create those unexpected, but delightful, surprises. Every time someone visits an online space, there’s a chance to offer them something new.

Watch, listen, adjust and adapt. Design by connection is not a top-down activity so much as bottom-up. Complex systems just don’t work that way. In a complex system, you need to pay attention to small things and make little adjustments along the way. Think about how city streets evolve: one small step at a time. One retailer moves to a larger space; another goes out of business. One old building is torn down and replaced; another is rehabbed and turned into lofts. Pay attention to the culture, and watch how people react to the tools you provide. Are they using something in a different way than you expected? Find out why and see if you can enhance that. And what are they ignoring? If they’re not using something you expected them to use, go talk to them and see if you can figure out the reason.

The typical company has a very short life, from 15 to 50 years. But cities – and some companies – live much longer lifespans: from hundreds to thousands of years. Wouldn’t you like that for your company? I know I would.

If you have thoughts I would love to hear them. Please take a moment and leave a comment.
UPDATE: The book "The Connected Company" is now available on Amazon!

UPDATE: Based on the extreme volume of response to this post I have set up an email discussion group for those who want to continue the conversation. Please join us here.

02 November 2010

In his book Smart Things, Mike Kuniavsky talks about the information shadow as an essential element of a smart thing. The information shadow is the information that's associated with an object such as its name, number, position in space and time, and so on.

Metaphors also help people understand new services by linking the new to the familiar. For example, RFID was first introduced as the next generation of the bar code, even though the two technologies had little in common.

Information shadows allow designers to make objects simpler, to reduce the size of interfaces and reduce the display requirements of an object. An iPod shuffle, for example, can be tiny because the information display resides in iTunes, not on the device.

Science fiction author and futurist Bruce Sterling coined the term spime to describe an object that can be tracked through space and time throughout the lifetime of the object.

This is part of a project called Ubicomp Sketchbook that I initiated with user experience designer Peter Morville, author of Ambient Findability and Search Patterns, in order to explore and explain the ideas aand implications of ubiquitous computing, sometimes called the "internet of things." Check out the whole set.

19 October 2010

I love my iPad, but the finger-only interface has been a continuing frustration for me. As an artist and designer, I want to do things that I can easily do with a pen and paper, like write, scribble and sketch. But these are not things we typically do with our fingers, any more than we eat soup or salad with our fingers.

Apple apologists will say that you can sketch and write with the iPad, and indeed we can. Yes, and indeed we can also eat salad or even soup without utensils if it's absolutely necessary. But that's not ideal, is it? Over the years we've developed tools, like forks, spoons, knives and yes, pens, that make life easier. We should expect no less from our interface designers.

This morning I participated in a stimulating discussion on twitter with user experience designers @docbaty, @daveixd, @mojoguzzi and @fred_beecher that left me thinking -- could we solve this problem without changing the hardware? And indeed I think we can.

The problem that a pen solves (beyond carrying ink around) is that it gives the user the ability to "see where they are going." Using your finger to draw on the iPad, or even one of the many styli that are available, has the tendency to hide the point of the virtual "pen," thus hiding the path.

Now imagine an interface that allows you to use the natural gesture you use to write with a pen or pencil, and gives you a point that you can see. Suddenly you can see where you are going and the primary problem is solved.

One of the things that occurred to me this morning -- which led to this insight -- was that when Apple first "virtualized" the keyboard by adding it to the software interface instead of the hardware, there was a lot of initial resistance. I was one of those resisters. I couldn't imagine using a phone without a physical keyboard. But over time, I learned to use the virtual keyboard and now I appreciate the additional flexibility that this interface gives me: to have more screen or less as the case demands.

Why not do the same with the stylus? A "virtualized pen" would answer most of my gripes and over time I would probably come to love it. I might even stop carrying a pen and paper around. And that would be an interface I could fall in love with.

"[Ubicomp is] the idea of integrating computers seamlessly into the world at large ... not simulating the world so much as enhancing the one that already exists ... [most of them] will be invisible in fact as well as in metaphor ... These machines and more will be connected in a ubiquitous network.

Today's design challenge, says Kuniavsky, is to create a practice of ubiquitous computing user experience design. Such a practice is by necessity cross-disciplinary, involving identity design (what makes the product or service memorable and unique), interface design (modes of functionality), industrial design (physicality), interaction design (how you can interact with it), information design (how it displays information), service design (how the service maintains consistency across many objects devices and experiences), and information architecture (organizing principles for the information).

That's a lot of D words! In other words it takes a team, and this will only increasingly be the case. The practice is changing quickly, and with the power to transform society comes great responsibility.

11 October 2010

In his book Smart Things, Mike Kuniavsky suggests metaphor as a tool for thinking through ubicomp designs and interactions. By mapping one category onto another we can discover new insights -- among other things, it's a way to trick the mind into seeing old things in new ways.

Organizational metaphors (ways of organizing services) include the factory, the public utility, parallel universes and so on.

Metaphors also help people understand new services by linking the new to the familiar. For example, RFID was first introduced as the next generation of the bar code, even though the two technologies had little in common.

Kuniavsky suggests that when exploring a new concept via metaphor, it pays to explore the dark side as well as optimistic scenarios to get a more well-rounded picture of the future system. How might your design be thwarted? How might the system be hijacked or co-opted for other uses?

In a recent post titled Ubuquitous Service Design, Peter Morville raised some interesting questions about how we might design for a world where everything is, or potentially can be -- smart. A world where your refrigerator knows what you had for lunch and when the lettuce will be out of date. A world where your car gives you suggestions for getting better gas mileage or tells you a better way to get where you're going.

In a ubicomp (ubiquitous computing) world, what kinds of methods, and what kinds of tools, will designers use to think through a whole new set of design problems? The environment and the context of use become much more important. Devices and services become stakeholders in the process, communicating not only with users but with other products and processes over a complex and deeply intertwingled network.

How will this change our approaches to design and change? How will it change our lives, our cities, and our social relationships?

Peter and I are embarking on a new project we're calling Ubicomp Sketchbook to explore exactly these kinds of things. We hope you will enjoy the ride and also share your thoughts, sketches and ideas. We'll be using the hashtag #ubicompsketchbook for our explorations.

Q: Your recent book on presentation design, Slide:ology, was a runaway hit. What made you decide to follow that up with a book about storytelling?

A: When I wrote Slide:ology, I thought that the most pressing need in business communication was the visual display of information (slides). So I wrote Slide:ology which addresses that. Once I started to see the principles applied in organizations, the slides looked great but it was really the content that was a mess. Beautiful slides created to accompany disastrous content is like dressing up a pig. My new book Resonate deals with the pig. Slide:ology was easier for me to write. It was like capturing what my organization had done for 20 years. The material easily poured from my head. With Resonate, I needed to do more homework and research. Many books exist in business around story but not as applied to a presentation. So I studied literature, cinema and even rabbit-trailed around topics like psychology, philosophy and music. After many hours of study, a great book poured out—from my heart though, not my head.

Q: There’s an image in the book that resonated with me. It depicts a sailboat tacking into the wind, an image that represents the presenter’s challenge to move their ideas against the prevailing status quo. What’s the story behind this image? Can you remember how you came up with the idea?

A: It’s funny you’d ask that because I got emotionally attached to the concept myself. Presentations are persuasive which means you’re trying to move an audience from one place to the next. I wanted to find a metaphor that moves back-and-forth like the presentation form sparkline does yet propels forward. Sailing was the most obvious metaphor. When I first developed the presentation form I’d sketched the shape zig-zagged (and that’s where I came up with the idea) instead of pumpkin-toothed as it is today:

I’d always envisioned the sparkline as moving back and forth as a zig zag but it was confusing so I changed the sparkline to pumpkin-tooth shaped, so the sailboat had to be used for a different metaphor. One of the guys on my content team tied in the concept of wind resistance as a parallel for audience resistance. Interestingly, when a sailboat is sailing against the wind, if the sails are set correctly to capture the wind resistance, a physics phenomenon happens and the boat can sail faster than the wind itself. That can happen with a presentation. Insert the ways your audience might resist and you’ll get them to adopt your side quicker.

Q: You describe the book as, at least in part, a research project. What process did you follow when writing the book? How did it work for you? Would you do it the same way next time?

A: My office was a mess while I worked on this book. I had books and printouts scattered all over the floor and every surface of my office. Plus I had hundreds of pages taped up on the walls. I was very mad-professor-like (see video below):

Because the book covers fundamental literature principles, I felt like I needed to study many topics deeply to make sure it was accurate and to avoid it getting challenged by communication professionals who’ve studied speeches for years. So I wanted to dig very deep on each into the subject matter to make sure I covered all my bases which took a ton of time. Honestly, it feels like a huge doctoral project. I used a lot of paper during this process, unfortunately. I’m very tactile and wrote and highlighted on paper. As I studied and read, various themes started to surface. I would binder-clip packets of my research together by topic and make a cover page of bright blue paper:

I built the first pass of the outline in PowerPoint. Each spread of the book has one title (message) and supporting text and graphics. Similar to a slide. So I print and re-print my deck. Posted, rearranged and re-posted it on my wall until the structure was sound. It was just like how we used 3x5 cards to write papers in college. I enjoyed my creative process. Many people thought it looked chaotic but I had a blast. I would definitely use the same creative process.

Q: You talk a lot about the presenter as mentor, like Yoda or Mr. Miyagi from the Karate Kid, the “guide on the side” who helps audiences come to conclusions on their own. Yet presenters often are expected to take the role of “sage on the stage,” the center of attention. It’s hard to picture Yoda or Mr. Miyagi on stage giving a dramatic presentation. How do you suggest that presenters can reconcile these two, seemingly contradictory, ideas?

A: That’s a good insight, Dave. The reference to mentor doesn’t dictate that they are low energy and are boring on the stage. I’m trying to get presenters to take on a change in mindset and a new stance in their role. The audience determines whether your idea is successful and applied, so they are the hero of your idea. The role of the mentor in movies and mythology is to bring a magical gift, tool or ability to get the hero unstuck. When was the last time you sat through a presentation and felt you received any of that? Besides, if Yoda needed to deliver a formal presentation he would be awe-inspiring I’m sure.

Q: You spend a lot of time talking about using sticky notes to map out presentations. Why do you think this is important?

A: Sticky notes work great for generating ideas, filtering them down and then arranging and rearranging them until the concept and structure are sound. Great structure plays a critical role in how digestible and insightful your findings are.

Q: Design geek question: Both Slide:ology and Resonate are large-format books packed with full-color images. And they’re square in shape! You don’t see square books very often. What made you choose this particular design for your books?

A: I envisioned both my books as reference books that people would want to lay open on their desk. Traditional 5x7 books don’t lay flat like that. Since I work in presentations all day, the open spread of the square books feels more similar to a slide-format and I’m stuck in a groove of writing one complete thought per page. The down-side of the wider format is that airport bookstores are hesitant to carry the book because it takes up too much shelf space. Bummer.

Q: Has your book-writing journey resulted in any learning that changed the way you approach your work? If so, what did you learn and how has it changed your work?

A: If you had told me three years ago that I would write books and enjoy it, I would laughed and called you crazy. Getting a book done (especially a visual book) takes determination and commitment. So it takes a fire in your belly and daily (and nightly and weekendly) discipline to complete a book. I discovered a few things about myself along the way. I found my writing sweet-spot. I always thought I was a night person, but come to find out I get my best work done between 5 a.m. and noon. Now I block every morning to get my brain-work done. In addition to a new way of working, I also discovered that I’m a systems thinker. I get pretty energized when I find patterns and connections that no one has seen before.

Q: If there’s one thing you hope people will take away from Resonate, what would that be?

A: I think that everyone is capable of changing the world (maybe not the entire world but at least their own world). Some of the greatest ideas have remained concealed because someone wasn’t brave enough or committed enough to communicate it well. I’m hoping that Resonate gives them a new mindset and guidance to communicate their ideas well so they’re adopted and make the world a better place.

If you want to buy either book I've made handy links for you right here. Highly recommended!

If you would like to see more interviews like this please leave a comment and let me know. Thanks!

27 September 2010

Description: New workshop on effectively communicating design ideas Wireframes don’t help us with the Why, only the What of our designs. Dave’s simple sketching techniques are powerful tools for communicating your design's rationale. You’ll learn solid strategies for visualizing your ideas, which will help you identify issues while creating great new experiences.